Railroads are in the habit of giving special rates on stuff sent over their lines for other roads. “It is done,” says one of the leading traffic managers of the country, “on everything that is handled,—supplies, coal, and material.”[239] This enables any one who stands in with the management of a railroad to have coal, etc., billed at low rates to the railroad for him.
The routing of freight is the source of a double discrimination. Connecting lines in some cases pay shippers to route the goods over their roads, while in other cases the connecting lines pay the rebates to the originating line, or make an agreement with it for reciprocal favors in the routing of freight.[240] Shippers receiving rebates from a connecting line can afford to pay the originating road or its clerks to route the goods over the said connecting line. Mr. Morawetz says it is customary for shippers to pay clerks in the routing department $5 or $10 to route the goods the way the shipper desires. Or it is done by giving theatre parties or presents to wives and daughters.[241]
In the California Orange Routing Case (132 Fed. Rep. 829) the United States Circuit Court decided that an agreement between railroads as to routing, whereby the apportionment of freight to connecting roads is affected, is in the nature of a traffic pool and comes within the prohibition of pooling, Section 5, of the Interstate Act.
The Interstate Commission held that the regulations of the Southern Pacific and Santa Fe, reserving to themselves the right of routing, were unlawful under the discrimination clauses, but the court did not decide this point. (I. C. C. Rep. 1904, p. 78.)
Mr. Ferguson says the private car-lines “sell the tonnage to the highest bidding connecting line. It is purely a matter of bargain and sale.”[242]
Unfair distribution of cars is an easy means of discrimination. Failure to furnish cars to complainant for shipments of grain, while supplying more than a fair proportion of cars to a competing shipper in the same town, is as effective as any rebate could be.[243]
Railways have refused cars to persons desiring to ship railroad ties which the railways did not wish to have go out of their own field.[244]
A Michigan railroad neglected to furnish the Richmond Elevator Company with cars in which to ship the hay the company had contracted to deliver, although the railroad was all the while supplying other shippers with cars for hay and straw, etc.[245]
The Pennsylvania Railroad has been recently sued by independent coal companies along its line for $2,000,000 damages for refusal to furnish cars in fair proportion. It is charged that the mines in which the railroad company is interested have had all the cars they needed, while the independents have not received cars enough to fill their orders; in consequence of which great loss has been inflicted upon them and their business diverted to the railway mines.
The B. & O. was also sued for refusing to furnish cars to the Glade Coal Company, while supplying cars to competing mines.[246]
In the case of the West Virginia Northern Railroad[247] the Circuit Court issued a mandamus ordering the road to cease from discrimination against the Kingwood Coal Company in the supply of cars and to furnish said company with a specified percentage of cars. In affirming this decision the Circuit Court of Appeals said:
“It is insisted that the court had no power in a proceeding of this character to fix the percentage of cars the relator should have, and to command that such percentage of cars should be furnished to the relator. The acts of Congress forbade discrimination and made it unlawful to give any undue or unreasonable preference or advantage to particular persons, companies, corporations, or localities, or any particular description of traffic, or to subject them to any undue or unreasonable prejudice or disadvantage in any respect whatsoever, and vested jurisdiction in the circuit and district courts to proceed by mandamus as a cumulative remedy for violations of the statutory provisions. We are unable to accept the view that Congress intended to confine the scope of the writ to admonition merely, or to a general command to desist from discrimination, rather than from the particular action in which the discrimination consisted. By the findings, the delivery to the relator of any less than 31 percent of the supply amounted to unlawful discrimination, and the judgment of the court did no more than to correct it.”
Sometimes it is the denial of a switch, that blocks the independent; for example, the railroads controlled by the coal pool refused to put in a switch for the Johnson coal mine or to permit the company to put one in until suit to forfeit its charter for refusing equal opportunities to shippers was begun in the Ohio Supreme Court. Then the switch was put in.
The Coal Combine and its railroads have persistently pursued the policy of crushing smaller rivals by denying them transportation facilities.
An exasperating form of discrimination near of kin to this refusal of cars is the refusal directly or indirectly to take shipments for certain persons or to certain points. The Hope Cotton Oil Company operates a mill at Hope, Ark., for the manufacture of cotton-seed oil. It desired to buy seed at various points on the Texas and Pacific Railroad. This seed could only reach the mill by passing over the Texas and Pacific to Texarkana and from there to Hope by the St. Louis, Iron Mountain and Southern Railroad. The published rate from the points in question to Texarkana was 12½ cents per hundred, and 5 cents from Texarkana to Hope. After receiving this information the agent of the Hope Company bought 49 carloads of seed on the line of the Texas and Pacific, intending to send them to Texarkana on the 12½ cent rate and from there to Hope on the 5 cent rate. Seventeen cars were sent in this way. But when the General Freight Agent of the Texas and Pacific ascertained what was being done, he refused to allow the shipments to continue, insisting that the seed must take the broad joint rate of 67 cents applicable to class A in which cotton seed belonged. Under his orders the station agents on the Texas and Pacific refused to bill the cars in any way to Texarkana on the published local rate of 12½ cents. The 67 cent rate amounted to $13.40 a ton on seed which only cost $14 a ton, and to insist on such a rate the Commission says “was for all practical purposes to decline to receive the cotton seed for shipment on any terms.”[248] The secret of the situation was that the Texas and Pacific did not want the cotton seed to go off of its line. If shipped to Texarkana mills or other mills on its line the products would find their way to market over that road, while if manufactured at Hope this would not probably be the case.
Denying a private switch to one party while providing such facility for a competing dealer[249] may amount to a preference similar to that resulting from free cartage.
A discrimination in the place of delivery of freight may work serious injury to a shipper. For example, D. W. Miner, a dealer in beef and pork products at Providence, complains to the Interstate Commerce Commission, July, 1905, that the New Haven road refuses to deliver his merchandise at the Canal Street yard where his place of business is located, carrying his freight half a mile beyond, while delivery is made to his competitors at the Canal Street yard.
Sometimes railroads discriminate even on long hauls in interstate traffic by taking advantage of the fact that the Interstate Commerce Act does not apply to State traffic. They take the car across the State line on a “mem.-bill,” then draw a new bill of lading marked “State Business,” and then pay the rebate without fear of disagreeable consequences.
In other cases the full freight is charged on the way-bill, but a fictitious entry is made in the prepaid column which is to be subtracted from the total amount of charges when the bill is collected. If the freight on a car amounted to $90, and $15 were entered in the prepaid column, $75 would be collected and the consignee would be in the same position as if he had received a rebate of $15 on the car.
Another method, akin to this, is to give the local agent at the station of delivery power to correct the way-bill, or deduct a certain percentage from every bill presented to the favored shipper. The agent forwards the amount collected as full payment, correcting his accounts so as to give himself the necessary credit, which is O. K.’d by the auditor of the road on his next visit to the station.
Large payments are made by some railroads “to encourage new industries.” They have the example of cities and States and of the nation to justify appropriations for the establishment of infant industries and development of the country, but they abuse the principle by making it a cover for payments which are really rebates to favored shippers. Some of the “new industries,” or infant undertakings, which the Wisconsin investigators found were being “encouraged” by cash contributions from the railroads, have been established and prosperous for 25 or 30 years, one of them being founded away back in 1873 and others in the eighties.
Sometimes the railroads make a low rate, joint or single, on certain goods when intended for a specific purpose, thereby limiting the low rate to certain favored shippers. For example, in a recent case decided on complaint of the Capital City Gas Company the railroads had made a joint rate of 90 cents per ton on bituminous coal from Norwood, N. Y., to Montpelier, Vt., when intended for railroad supply, while the ordinary combination rate of $1.85 per ton applied to such coal carried between the same points and used for manufacturing or any other industrial or domestic purpose. This was held by the Commission to be an unlawful discrimination, on the ground that it is not permissible under the Interstate Commerce Act for two or more carriers to establish a joint through rate less than the sum of their locals, which shall be applicable only to a particular shipper, or class of shippers, while denying such low rate to other shippers of like traffic between the same points.[250]
A method of discrimination that has spread enormously in the last year is to pay large salaries or commissions to traffic agents located at important points, on the understanding that these traffic agents shall divide their salaries or commissions with favored shippers. This is much safer than paying rebates or commissions direct to the shipper, and is one of the most difficult forms of discrimination to overcome. In the recent investigations in Wisconsin and other States this method has been found in frequent use, along with underbilling and underweighing of freight, the allowance of cartage or switching charges to favored shippers, permission to hold cars as a means of storage for considerable time without demurrage, midnight tariffs, direct rebates, etc., etc.